Whenever a large amount of money is involved or jobs of large number of people are going to be affected there is hue and cry over hidden costs and unwritten obligations.
The same thing is happening in outsourcing business. Vested interests in America and Europe are crying wolf where there is no wolf.
Even if an outsourcing company saves 20% by outsourcing it is a great deal of money calculated annually.
The current overflow of outsourcing should cause no surprises. The work which you can get done in US or Europe for $100-$150 costs $20 an hours in Bangalore. But this is also an exaggeration. Though there is substantial amount of saving involved in outsourcing work.
Whenever any work is outsourced the expense of selecting a service provider can be added to the cost. These include costs of contracts to be signed and legal costs. You may wish to go there and check on the spot whether the services offered are same as they are actually there.
The Director of a company spent several months before selecting a Bangalore based Information Technology Company. His explanation was very true. He said that we are offering a very big contract worth Hundreds of thousands US Dollars; we have to be sure that service provider has skilled personal and infrastructure to execute the contract.
When there is an existing relationship between outsourcing company and service provider the company’s have to go trough whole process. They have to send their senior representative for on the spot survey specially when contract is big and large amount is involved.
It is all round better for long term relationship between outsourcing company and service provider. If both settle terms and conditions clearly. American and European companies stand to gain financially by outsourcing as India has unlimited skilled and qualified manpower and infrastructure to provide the best of services at competitive rates.
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A PEO or Employee Leasing arrangement goes beyond traditional payroll services by offering more competitive rates on Employee Health Benefits and workers compensation. For example, a business of 10 employees would be unable to negotiate a favorable deal with insurance carriers, while an employee leasing firm of 2,000 employees would be in a position for volume discounts. Similarly, small businesses do not have the resources to offer their employees attractive retirement packages; such as 401K Plans. In tight labor markets or competitive professions, the quality of the benefit packages may help skilled employees select one employer over another.